Motorola will not support billionaire Carl Icahn's bid to join its board of directors, the company has informed shareholders.
Motorola told shareholders of its position via a Friday notice announcing its 2007 annual meeting, which will be held May 7 in Chicago. In the notice, the company said the board is not endorsing Icahn's request for a seat. The notice also urged shareholders not to sign any proxy cards sent by Icahn or his affiliates.
The handset giant said it did not know whether Icahn or any of his affiliated companies will nominate him. But the company recommended a slate of its own nominees for the board seats. Motorola's board is composed of 11 seats, and all board members are seeking re-election except for two, H. Laurance Fuller and Indra Nooyi. David Dorman, the former chairman of AT&T, will be seeking a seat for the first time.
In January, Icahn, who owns a 1.39 percent stake in the company, notified Motorola's board of directors that he wants to be considered for a seat. Last week, Motorola said it received notice that Icahn and three of his entities had filed to buy more than $2 billion, or 4.4 percent, of the company's common stock.
Icahn's initial proposal for a board seat came just weeks after Motorola had announced disappointing fourth-quarter earnings as handset prices continued to decline.
Wall Street analysts say Motorola is still struggling with cell phone sales. In a research note published Monday, Mark Sue of RBC Capital reduced his projections for handset unit growth.
"The mess from (the fourth quarter of 2006) is spilling into the current quarter," he wrote. "And Motorola's product portfolio appears to be underperforming its peers."
Icahn, who has a history of getting involved with companies he sees as improperly managed, believes that Motorola's stock is undervalued. He has said he wants Motorola to spend the majority of the $11.3 billion in cash it has in the bank to buy back company shares and help boost the stock price.
Motorola's management has initiated a stock buyback program, but the company wants to use some of its cash for acquisitions to diversify the business.
It's clear that pressure is mounting on Motorola. In February, Ron Garriques, the head of Motorola's mobile-devices business, left the company and took a job with Dell.
Representatives of neither Motorola nor Icahn were available for comment Monday.